A partnership can take your business to great heights OR it could pitch it into a downward spiral that could ruin it all. This is why, selecting the right vendors, who are your business partners and stakeholders, is vital.
An RFP (Request of Proposal) is a business document that presents a project in context of the organisation. Its main purpose is to announce a project and its goals so that suitable vendors can submit the best possible proposals. Once these proposals come in, it is time to make the important decisions that affect the efficiency of your project – and at large your business.
It is imperative to set strong criteria and create an adequate selection process when choosing a vendor for your business. Be stern and straight forward with your requirements; make it very simple and clear as to what kind of service you require. This will urge vendors to analyse their own capabilities before submitting their proposal. Making the wrong decision in this step can cost your business significantly in terms of time, money and reputation.
Why Is Vendor Selection An Essential Phase Of RFP?
Here are a few reasons why the Vendor Selection Phase is important –
- The key intention is to reduce human emotion and political viewpoint in order to arrive at an unbiased decision that benefits the company.
- Careful evaluation will help your business avoid low-quality or dishonest vendors.
- Your business will achieve better terms and reasonable pricing through competitive bids, hence making it cost effective. You can aim to get the best outcome for a reasonable price.
- The process includes getting customer references ensuring that a vendor is financially viable and punctual in meeting your business needs.
- Your company’s reputation can sometimes depend solely on the kind of work or service the vendor provides and nothing is worth risking that.
Step By Step Process to Follow When Evaluating RFP Proposals
1
Form an evaluation team with the best suited representatives from each of the listed departments.
2
Create a first short list of eligible vendors based on how they meet the requirements listed in your RFP. Ideally, your RFP should have a scorecard with weighted scores which can help you evaluate vendors objectively.
3
Rate to which degree each proposal and vendor meets your company needs against the scorecard and discuss scores and review the alignment.
4
After scoring each proposal, a list of finalists can be created. Request these finalists to perform presentations/demo and filter accordingly.
5
Conduct a thorough back-ground check on vendors of interest. Collect multiple customer reviews and read any relevant case study on the vendor’s website. Negotiate terms, prices, discounts, delivery dates and deadlines.
6
The previous step should lead you to your winner. If it is a tie between two or more vendors,
scrutinise them, request more information or presentations until you are left with a clear winner.
7
The final step is to draft a detailed contract with the selected vendor.
Things To Consider When Selecting A Vendor
Price
To get the best deal your aim should be to receive the maximum value for the lowest possible cost. A word of caution is not to choose the lowest bid without analysing the value you will receive. Other components to consider are travel surcharges, administrative expenses, and maintenance fees. Discuss these details with the vendors beforehand to avoid any conflicts later and make sure the bid includes every line-item cost.
Quality of service
Price doesn’t matter if the service falls short of your expectations. Make sure the quality of the service will meet your needs. Learn all you can about the vendor’s performance history. Ask for referrals and talk to other companies whose opinions you trust and ask them if they were satisfied with the quality of work provided by this vendor. References are truly invaluable. Request for a list of at least three references and enquire with those customers about their experience with the vendor’s service.
Reliability and Flexibility
The vendor will be an integral part of the business so make sure that you know if you can depend on them to do what they say they will do in due time. Your customer should not be let down because your vendor let you down. Another good quality to look for in a vendor is flexibility. Ask if they will be able to handle sudden changes in schedule or deliveries at a time that is convenient for you or any rush decision in general that may arise. Find a vendor that perfectly fits in with the way your business operates.
Ethics and Integrity
Your business integrity and reputation depends on the integrity of the vendors you hire. Make an honest effort to learn a bit about your vendor, their style of working and how important high ethical standards is to them.
Dos And Don’ts In The RFP Vendor Selection Process
- Do – Negotiate for best and final pricing and service level from your vendor.
- Do – Conduct thorough checks before you make a final decision.
- Do – Take the references provide seriously. Use them to understand client-side stories and experiences better.
- Don’t – Sign the contract without thoroughly reviewing it first. (Get your legal team to appraisal as well)
- Don’t – Draw a conclusion based on price alone.
- Don’t – Judge a vendor by the proposal alone.
- Don’t – Assume that you know all the players, even the top ones from your vendor list.
How To Decide The Project Budget
Deciding and finalising the budget on a project can be a tedious task.A few techniques can make this much simpler than it appears:
- Bottom To Top – Rate and put a value on individual parts of the project and total them up.
- Top To Bottom – Figure out the total and then split it amongst tasks and milestones.
- Analogous Estimation – Analyse and compare the data with similar projects to decide the cost.
- Parametric Estimation - Compare cost variables or data points from specific parts of specific projects and employ them into the current project.
- Three-point Estimation – Take an average of the best, worst, and most likely case estimates. This way you can figure out the most realistic cost estimation.
Fingent Can Be The Vendor You Are Looking For
Selecting the right vendor need not be a tough job when you follow these tips. If it’s a technology partner you are looking for, Fingent might be able to help you. Our tech experts have been providing clients with custom solutions globally. We would love to have a look at your RFP, so please do share it with us.
US
Insurance
